Our comments for a publication about the Disclosure of Tax Avoidance Schemes to the State Tax Inspectorate

JURIDICON attorney-at-law, tax expert dr. Laimonas Marcinkevičius has submitted his comments to the Lithuanian "Business News" ("Verslo žinios") business newspaper’s publication about the Disclosure of Tax Avoidance Schemes to the State Tax Inspectorate. This publication analyses the new rules disclosure model, which has been introduced this year on the 9th of March by the OECD. These rules require lawyers, accountants, financial advisors, banks and other service providers to inform tax authorities of any schemes they put in place for their clients. Such rules have been implemented in order to avoid reporting under the OECD/G20 Common Reporting Standard (CRS) or to prevent the identification of the beneficial owners of entities or trusts. It is believed that these rules in Lithuania will take effect not earlier than in a year’s time. However, it should be noticed that in certain cases it could be required to submit a notification about the scheme implemented before the rules came into effect.

The publication provides general information on the obligation for intermediaries to report on the services provided to their Clients bypassing the requirements for disclosure of bank account information (CRS). “Many taxpayers that held undeclared financial assets offshore have come clean to their tax authorities in the recent years, which has already led to over 85 billion of additional tax revenue” – said Mr. Marcinkevičius.

As indicated in the publication: "the new rules also require the reporting of structures that hide beneficial owners of offshore assets, companies and trusts." Attorney-at-law Laimonas Marcinkevičius noted, that “the information must include all the steps and transactions that form a part of the Arrangement or Structure including key details of the underlying investment, organisation and persons involved in the Arrangement or Structure and the relevant tax details of the Clients and users of the Arrangement or Structure as well as any other Intermediaries. Also, attorney-at-law indicates that “the rules do not require an attorney, solicitor or any other admitted legal representative to disclose any information that is protected by legal professional privilege or equivalent professional secrecy obligation, in cases when the intermediary is not established in the EU, the taxpayer himself must report about the schemes.”

In addition, the rules require Promoters to disclose CRS Avoidance Arrangements entered into force prior to the effective date of the rules, but after 29 October 2014, but only in cases when the value or balance of the relevant Financial Account equals or exceeds USD 1,000,000.